fracking – Page 4 – Outrun Change

Outlook for oil, some short-term and long-term thoughts

Tight Oil Production - Courtesy of Energy Information Administration — Tight Oil Production – Courtesy of Energy Information Administration

More news on the energy market. Supply and demand may equalize soon. Maybe.

Saudi Arabia may have bit off more than they can chew. The US and world markets will benefit, along with everyone who consumes energy.

7/1 – AP at Bakken.com – US energy secretary sees oil market coming into balance – The Saudi oil minister thinks worldwide demand will catch up with production by around the end of 2016. The US Energy Secretary thinks it will go into 2017, perhaps another year. Prices likely to go up as demand and supply stabilize.

7/18 – Wall Street Journal – Oil Prices Steady but Products Glut Looms – There are hints in the air that several markets, such as gasoline, are oversupplied, which will put downward pressure on crude oil prices. Another indication that nobody can predict the future.

7/31 – Ambrose Evans-Pritchard at the Telegraph – Texas shale oil has fought Saudi Arabia to a standstill – This is a must-read if you follow my blog.

Twenty months ago Saudi Arabia launched a price war, generally considered to be an effort to take out American shale producers.

Didn’t quite work out that way.

Continue reading “Outlook for oil, some short-term and long-term thoughts”

A few more signs of energy recovery

Where crude oil goes for refining so we can have the gas to drive our cars. Photo courtesy of DollarPhotoClub.

There are some signs that oil production is slowly recovering. Productivity improvements continue. Hints that the US has more oil reserves than Saudi Arabia.

7/1 – The American Interest – Frackers Fix Their Fatal Flaw – A report from Reuters indicates several drillers have figured out how to ease the extreme drop in production early in a shale well’s life.

Continue reading “A few more signs of energy recovery”

North Dakota oil production recovers a bit in May 2016

Oil production in North Dakota dropped about 6.3% in April and recovered a little in May, increasing about 0.5%. Here is the average daily production for last three months:

1,111,544 – March
1,041,981 – April
1,047,364 – May

Here are a few graphs that show the picture:

Average production by month statewide and Bakken only since 2008 is shown at the top of this post
Average production for the state by month since 1990
Crude prices by month, which shows a modest recovery
Value of monthly production, which show a faint whiff of a hint in the air that maybe production is coming back to life
Fracklog, which is the number of wells drilled to depth but awaiting fracking before production may begin

Continue reading “North Dakota oil production recovers a bit in May 2016”

Timeline of Bakken oil production

For long-term archive purposes, here is a timeframe for the Bakken boom.

6/28 – The Million Dollar Way – The Bakken Is In Its Manufacturing Stage – Bruce Oksol provides a useful long-term perspective on how Bakken production has developed:

2000: the Bakken boom begins in Montana

2007: the Bakken boom begins in North Dakota

2012: the Bakken hits its stride

early 2014: the Bakken setting new records, almost every month

late 2014: the Saudi Surge

2015: the Bakken re-trenches

1Q16 taxable sales 50% greater than 1Q10

mid-2016: the Bakken bottoms out — at least that is what the tea leaves suggest

For more perspective, here is the average daily production for each of the above years. I calculated the following from data pulled from the state website: Continue reading “Timeline of Bakken oil production”

More followup on multi-well pad drilling. Links for a couple of superb photos.

Multi-well pad being drilled. Photo by James Ulvog. — Multi-well pad being drilled in Williston. Photo by James Ulvog.

Yesterday’s post on multi-well pad drilling saw lots of visitors from The Million Dollar Way. Bruce Oksol linked to the post in his discussion, Multi-Well Pad Drilling In The Bakken.

He has discussed this pad before. See his post for links.

Mr. Oksol links to a photo of the site taken by Vern Whitten: Vern Whitten Fall Portfolio. Since I try really hard to avoid copyright violations, you won’t see his photo on this blog. Instead you can see Mr. Whitten’s photo at this link. It is photo 28 of 39.

Incredible view from an incredible photographer.

Continue reading “More followup on multi-well pad drilling. Links for a couple of superb photos.”

Yet another reason I am so optimistic when I take my eyes off the political news of the day: the energy revolution that keeps gaining speed.

One more illustration of the energy revolution currently underway. BTW, flaring is down to about 11% of all natural gas produced. Photo by James Ulvog. — One more illustration of the energy revolution currently underway. BTW, flaring is down to 9.2% of all natural gas produced. About 91% is captured, which shows great progress. Photo by James Ulvog.

When I look at the political news and the headlines in general news every morning, I get so discouraged. When I look away from those areas I am so optimistic.

Consider what the two following articles suggest about how bright our economic future could be: an abundant supply of oil and gas at increasingly lower cost to produce.

6/13 – JH at The American Interest – Resilient Shale Producers Get Their Second Wind – Article mentions a Financial Times article which indicates there is some increase in drilling, which is driven by prices a few weeks ago. Since then oil prices have come up further. Discussion speculates if prices remain in the $50 range there will be even more drilling.

The small-scale and short development time of shale wells creates a soft ceiling on prices. Shale production can increase quickly which will put supplies on the market quickly, which will counter a surge in prices.

A quoted analyst says his expectation is a long-term price of oil around $60. There will be fluctuations up to $80 and down to $40, but the price will tend toward $60. Drillers needing a price higher than that to be profitable will have a rough time.

Continue reading “Yet another reason I am so optimistic when I take my eyes off the political news of the day: the energy revolution that keeps gaining speed.”

Is the oil market ready to turn?

There is room for a few more wells on that site when the price is right. Photo by James Ulvog. — There is room for a few more wells on that site when the price is right, which may be soon. Photo by James Ulvog.

Daniel Yergin thinks so.

Bargain hunters who are hunting bargains think so.

Increase to $50 has some producers completing DUCs, which tells us those producers think so.

Oh, USGS estimates a field in Colorado has 40 times more natural gas that previously estimated. The field is almost as large as Marcellus.

6/5 Calgary Herald – Oil recovery is on its way after two-year-long rout, says energy economist – As one of many comments at a conference in Calgary, Daniel Yergin said he thinks the oil industry at the start of a recovery.

Continue reading “Is the oil market ready to turn?”

Guesses on long term impact of shale revolution

Just one of many thousands of reasons OPEC is in distress. Photo by James Ulvog.

A guess on what price will keep the shale revolution going in the very short-term. Background discussions of the impact from the shale revolution: cheap oil era is upon us, oil prices won’t hit $100 again, and OPEC has lost its pricing power. Interview with Daniel Yergin is a must read.

4/28 – The Million Dollar Way – Lifeline for Oil Companies – Here is a guess on the framework for oil pricing, courtesy of Rigzone:

$40 – lifeline for US shale oil
$50 – most shale companies survive
$60 – all thrive

5/4 – Reuters at Dickingson Press – DUCs in a row: Oilfield servicers to gain as more wells completed – Halliburton and Baker Hughes expect a number of Drilled but UnCompleted wells (DUC) to be fracked now that prices have recovered somewhat. They expect the gross number of DUCs to decline.

5/3 – Scientific American – The Age of Cheap Oil and Natural Gas is Just Beginning – Authors see two revolutions that will continue to spread.

Continue reading “Guesses on long term impact of shale revolution”

North Dakota oil production drops 0.9% in March ‘16

Production in the state dropped from 1,119,092 barrels a day (revised) in February to 1,109,246 bopd in March. That is a drop of 9,846 bopd, or 0.88%.

That represents a decline of 102,084 bopd since the high point of 1,211,330 in June 2015. That is a 8.4% decline.

Rig count averaged 32 in March and 29 in April. That is in contrast to 78 in June 2015 and 193 in March 2014.

Here is what the production graph looks like. This is the only graph I will run this month.

The energy revolution driven by fracking isn’t over – 2 of 2

Horizontal drilling and hydraulic fracturing have turned the energy world upside down. The massive transition isn’t over. A few articles on the massive benefits of fracking. Part 1 of this discussion here.

2/14 – Matt Ridley, Rational Optimist – Low Oil Prices Are a Good Thing / The shale revolution has changed the world – Article explains that low oil prices are an incredible benefit for consumers across the world.

Pointing out news that is not news to anyone who has paid attention to the energy business in the recent years, article explains the current volatility is currently disrupting and will continue to disrupt many producers. A lot of producers will go out of business. Keep in mind that the drilling rigs, equipment, and especially the oil under the ground will not vaporize as a result. The know-how to more efficiently drill more productive wells more quickly more cheaply will be around a long time.

Article explains a cited book which makes the point that the shale revolution is just getting started. The improved efficiency producing higher output in the last two years has brought many producers to the point where they can be productive in the $30 or $40 range.

The technology has increased to the point that if prices rebound to slightly higher levels than where they are now would make it possible to bring horizontal drilling and hydraulic fracturing into conventional oil fields and produce increases there.

The net effect of all these amazing advances is that shale oil will put a cap on how far oil prices can rise. As prices go up a whole bunch of undrilled locations become lucrative.

3/1 – Mark Perry, Carpe Diem – Charts and Updates on America’s Amazing Shale Revolution, It’s Not over yet… – Astounding graphs, as usual.

Continue reading “The energy revolution driven by fracking isn’t over – 2 of 2”

A glowing tribute to the founder of Peak Oil foolishness – peak oil #46

Comparison of Dr. Hubbert's 1956 prediction with actual gas production. Rough approximation of Dr. Hubbert's graph. — Comparison of Dr. Hubbert’s 1956 prediction with actual gas production. Rough approximation of Dr. Hubbert’s graph.

Professor R. Tyler Priest has a review at the Wall Street Journal of The Oracle of Oil by Mason Inman. His assessment is covered in the title: Ignoring the Shale Revolution / U.S. oil production, at nearly nine million barrels per day, is nine times what Hubbert predicted it would be in the 21st century.

My rough graph above shows the lousy accuracy of Dr. King’s 1956 projections of natural gas production in the US.

Dr. M. King Hubbert fell in with a fellow named Howard Scott, whom Prof. Priest calls

a magnetic charlatan.

Mr. Scott dreamed of a glorious time in which scientists and engineers would run the world through a powerful Technate or Technocracy Inc. As I have mentioned before, I’m not sure if this authoritarian system was more fond of fascism or communism, but it certainly was authoritarian. My inclination is this tended toward fascist, meaning our betters would let us peons own private property but they would tell us what we can do with our property and how we can live.

Dr. King was apparently not a very nice person. The review highlights Dr. King’s approach to knowledge:

It was not enough for him to be right. Someone had to be humiliated in the process. Mr. Inman appears uninterested in pondering the mixture of arrogance and resentment that shaped Hubbert’s personal interactions.

That Dr. King had an overabundance of arrogance is visible if you read through his 1949 and 1956 papers.

Continue reading “A glowing tribute to the founder of Peak Oil foolishness – peak oil #46”

The energy revolution driven by fracking isn’t over – 1 of 2

Workover rig. Photo by James Ulvog. — Workover rig. Odd-angle photo by James Ulvog.

Horizontal drilling and hydraulic fracturing has turned the energy world upside down. The massive transition isn’t over. A few articles on resilience of the industry.

Oh, and a university report showing no ground water contamination from fracking will be kept from public view. Why? Actual research results contradict the researcher’s stated agenda.

3/9 – Reuters – Forget fracking. Choking and lifting are latest efforts to stem U.S. shale bust – Never bet against human ingenuity. Article addresses two more ways brilliant minds in the oil industry are addressing the Saudi-inspired price collapse.

Choking.

Lifting.

Continue reading “The energy revolution driven by fracking isn’t over – 1 of 2”

More statistics for North Dakota oil production, April 2016

[youtube=https://www.youtube.com/watch?v=c9nnsAGyQ2k]

Rounding out the picture of North Dakota oil production based on data released by the state on April 15, 2016, here is a graph of the sweet crude prices in North Dakota from January 2010 through April 2016. Quite visible is the dramatic drop in late 2014. Of particular note is prices have recovered in the last two months.

Next is a graph of the rig count by month. You can also see a dramatic drop starting the end of 2014.

Finally is a graph of the fracklog from January 2012 through February 2016. This is the number of wells that have been drilled yet are uncompleted (DUC) meaning the well is drilled to total depth but the fracking has not yet been done. Basically this is a half million barrels of oil put on the inventory shelf until prices recover. That represents nearly a thousand wells than can be brought on-line rather quickly.

Continue reading “More statistics for North Dakota oil production, April 2016”

Oil production in North Dakota barely drops in February 2016

[youtube=https://www.youtube.com/watch?v=0ks2ua4imgU]

Average daily production dropped to 1,118,333 bopd (Prelim) in February from 1,122,462 (revised +352 bopd) in January. That is a mere 4,129 bopd decline, or 0.37%.

Here are a few graphs to paint the story. First average monthly production from 2008 through February 2016 showing total for the state and Bakken field only. Included in that graph is a pro forma of what production would have been (based on my wild guess) if the production increased after the winter at the average rate of increase over the preceding 24 months.

Second graph is average production in the state since 1990. Finally, to show the change since 2010 more dramatically is a graph of production since 2004.

two more follow:

Continue reading “Oil production in North Dakota barely drops in February 2016”

How easily can US shale oil bounce back?

Will we see bunches of those soon? Yes, no, maybe so.

Will production of shale oil recover as oil prices rise? I’ve seen several articles discussing whether that can or will happen. Three articles saying yes, no, and maybe so.

Yes.

2/29 – Reuters at CNBC – US shale’s message for OPEC: Above $40, we are coming back – Multiple comments indicate that $40 oil today is like $70 oil a year ago.

Continental Resources says will start drilling if US crude increases to mid $40 range. Whiting Petroleum will start completing DUC wells if oil is in the low 40s. A year ago comments were that companies would start increasing the drilling if oil hit $70.

Article says Hess reduced the cost of a new well by 28% over the last year.

EOG says they have these rights for 3,200 wells which would produce a rate of return of 30% when oil is at $40.

Implication of these comments is shale production would likely ramp up when prices move into the 40s, perhaps more likely the high 40s. That would create substantial pressure on worldwide oil prices, keeping them from rising too far.

No.

3/15 – Wall Street Journal – Many Shale Companies Are Unable to Ramp Up Oil Output – Article raises a great point that just as output from shale oil has fallen slower than anyone expected, there are different reasons that shale producers may be challenged to ramp up production when prices increase.

Continue reading “How easily can US shale oil bounce back?”